Ray Washburne on Tariffs, Consumer Health, and Global Trade Reset

Navigating Trump's Tariffs and Supply Chain Shifts

• 🎯 Red Lobster shifted its shrimp sourcing from China to India, Vietnam, and the Texas Gulf Coast due to tariffs, demonstrating a proactive supply chain adjustment.
• 💡 Tariffs have forced businesses to rethink their supply chains, including sourcing to-go packaging, leading to a push for nearshoring.
• ⚠️ While 150% tariffs are unworkable, businesses can absorb 8-10% tariffs, but 20-30% presents a significant challenge, potentially impacting consumer prices.
• 🤝 The speaker believes President Trump understands business needs and will find compromises as policies evolve, potentially leading to a positive reset of global trade for the US.

Business Diversification and Real Estate Holdings

• 🏢 Gillon Capital and Gillon Property Group own significant real estate assets, including open-air shopping centers like H Park Village (Dallas), Country Club Plaza (Kansas City), and Phillips Place (Charlotte).
• ⛽ Sunoco LP is the largest seller of refined products in the Americas, with a business model largely unaffected by tariffs due to domestic production.
• 🍤 Red Lobster, now owned by Fortress, has 27 locations and is navigating bankruptcy recovery and operational adjustments.

Economic Indicators and Consumer Sentiment

• 📉 Gasoline sales are soft compared to the previous year due to high refinery capacity and consumer slowdown in driving, influenced by economic uncertainty.
• 🛒 Consumer debt, particularly credit card debt, is at an all-time high, signaling potential economic strain.
• 🚗 While EVs are entering the market, concerns about charging infrastructure and range limit widespread adoption for longer distances.
• 🚚 Diesel sales remain stable, serving as a barometer for the economy, as American commerce heavily relies on diesel-powered trucks for distribution.

Global Trade and Sourcing Strategies

• 🌍 Tariffs are encouraging a move away from China, with potential for increased business in countries like India, Vietnam, and parts of Central and South America.
• 🤝 The speaker advocates for diversifying sourcing away from China due to its global dominance aspirations, emphasizing the untapped labor markets in other regions.
• 🚢 While nearshoring is occurring, bringing highly labor-intensive processes like hand-breading shrimp back to the US is challenging due to labor costs and laws, though automation could be a future solution.